Snap-On Financing Terms?

[kythri]

I don't want to call the dealer, because I don't want to get Snap-On credit.

But after drooling over the box combo I picked out yesterday for when I win that $5K Snap-On contest, I was kind of curious what kind of credit terms they offer.

I hate you guys.

What are their durations on things? Do they want stuff payed off over a year, two years, five?

 

[myslow2002gt]

Put some money aside each pay period, and you'll own it sooner than you think. And, you won't have to pay any interest.

 

[krusty the clown]

the duration of the loan will depend on the amount financed, typically 2-3 years.

 

[daveblank]

Matco does them up to 4yrs

 

[fatfillup]

Are you sure about the no interest? I believe that varies.

 

[Stephenw]

For small dollar items, the local dealer usually carries the loan on his truck account. This is also usually interest free. Big ticket items like a tool box are almost always financed through Snap-On finance. They most certainly charge interest. The rate is comparable to what other finance companies charge for a similar loan.

 

[myslow2002gt]

Are you sure about the no interest? I believe that varies.

No, what I meant was put aside money into a savings account each pay period, then pay cash for it when he has enough.

 

[paramudduck]

Other wise know as start a tool box jar. Toss all your change in it every day.
You would be amazed how fast you can build up a fund.

 

[Scooterfish]

On a thread here recently someone who had a route said the internal rate on a box was about 20%. When you buy a box at say $5000 they have the rate built into that price.

Please correct me if I`m wrong on this

 

[goeb92]

most reps will carry you on a ra account or truck account up to 2500 dollars

 

[goeb92]

at least mine will

 

[daveblank]

On a thread here recently someone who had a route said the internal rate on a box was about 20%. When you buy a box at say $5000 they have the rate built into that price.

Please correct me if I`m wrong on this

Not true. Interest is not pre figured on items.

 

[goeb92]

how about going to vegas next week and asking about matco financing terms there will be alot of dealers there

 

[Merkava_4]

Don't go out a buy a brand new Snap-on box ... in one month you'll have figured out all the things that should've been made better with the box and you'll be asking yourself why you paid so much.

 

[joeswamp]

On a thread here recently someone who had a route said the internal rate on a box was about 20%. When you buy a box at say $5000 they have the rate built into that price.

Please correct me if I`m wrong on this

I don't know about boxes, but in this post I estimated the effective rate of interest on a rebranded torque wrench to be somewhere between 198% and 467%.

SO stuff is really pricey because most products are intended to be bought over time by very risky customers, and this risk must be factored into the price. I wish they could formally discount for cash but, as another poster pointed out, they'd then be in violation of usury laws in several states.

 

[clueless]

also depends on what you would like to pay a week.i got a $40/wk for 18 month,little over $300 finance charge.works for me..

 

[Merkava_4]

I wish the steel was thicker on my Snap-on box; especially the drawer bottoms.

 

[daveblank]

how about going to vegas next week and asking about matco financing terms there will be alot of dealers there

What questions do you have?

 

[daveblank]

I don't know about boxes, but in this post I estimated the effective rate of interest on a rebranded torque wrench to be somewhere between 198% and 467%.

SO stuff is really pricey because most products are intended to be bought over time by very risky customers, and this risk must be factored into the price. I wish they could formally discount for cash but, as another poster pointed out, they'd then be in violation of usury laws in several states.

From your other post. "The list price of the 20-100ft-lb split beam torque wrench is $175 from Precision Instruments, and $250 from Snap-On.

Let's say the SO guy allows you to buy the $250 wrench for $25 per week for ten weeks. If you imagine this as an amortized mini-mortgage, this is like paying back $250 on a loan for $175. In any kind of loan you always pay back more than you borrow, but the question is: what is the equivalent annual interest rate? I used an amortization calculator to estimate this, and it's about 467%
"

The amortization caclulator is messed up. The difference between 175 & 25 is a 30% margin. Now think of this. There are many companies that will sell you or any other customer an item for the same price that they sell it to the Tool company. The tool company will then mark it up & sell it to the distributor so they can make money. So now the margin is less than the 30% that we just figured.

 

[Scooterfish]

$175 mark up to $250 is a 43% mark up. I assume a part of that to be a fair profit. If the pay back is 10 weeks assume $50 is the fair profit, so $25 is the "internal interest" charge for carrying it 10 weeks. The $25 is 10% of purchase price. but you need to annualize the 10 weeks which is 1/5 of the year. So 5 times $25=$125 which is 50% yearly interest rate.

Your terms & rates may very

I`m not putting down any tool truck business here. They provide quality tools delivered to your door with pay as you earn. I believe as said above pay you saving account each pay day and get a discount for paying cash

 

[joeswamp]

Some confusion here... $175 is the SUGGESTED LIST PRICE from Precision Instruments, the wrench manufacturer. You can actually beat this price at several tool dealers. Snap on is probably their biggest customer, so there is absolute no way they are paying list for these wrenches from PI.

What I'm assuming here is the 43% premium you pay for the Snap-on name is essentially the interest you're paying for buying the tool on time. You have to pay 43% interest over a relatively short period (a couple of months), so the equivalent annual percentage rate ends up being really big.

Note that you probably should be paying some kind of premium for the Snap-on dealer service, but even if you split the difference between $175 and $250 the effective annual interest you're paying is still in the triple digits.

 

[Scooterfish]

Joe I think we pretty much are in agreement. I was using very conservative figures.Noted on the $175 retail.I was only comparing what it was costing EXTRA for to your door service and paying over 10 weeks vs buying it else where for $175 cash.

Tool dealer in quanity may be buying for $100 per unit, selling for $250. Yes the total persentage is well into triple digits. No the tool truck driver is not making all the $$$$.

 

[daveblank]

$175 mark up to $250 is a 43% mark up. I assume a part of that to be a fair profit. If the pay back is 10 weeks assume $50 is the fair profit, so $25 is the "internal interest" charge for carrying it 10 weeks. The $25 is 10% of purchase price. but you need to annualize the 10 weeks which is 1/5 of the year. So 5 times $25=$125 which is 50% yearly interest rate.

Your terms & rates may very

I`m not putting down any tool truck business here. They provide quality tools delivered to your door with pay as you earn. I believe as said above pay you saving account each pay day and get a discount for paying cash

You are quoting mark up. We work off profit margin. They are different. To figure profit margin take your cost & divide by the reciprocal. So 30% margin on $157 is $250. Take the 175 divide by .7 & you'll get 250.

Your calculations of payments towards profit does not equal interest. Interest is charged above & beyond profit.

 

[daveblank]

so there is absolute no way they are paying list for these wrenches from PI.

Some manufactures do not discount. I'm not dealing with them direct so I don't know what they are doing.

$175 mark up to $250 is a 43% mark up. I assume a part of that to be a fair profit. If the pay back is 10 weeks assume $50 is the fair profit, so $25 is the "internal interest" charge for carrying it 10 weeks. The $25 is 10% of purchase price. but you need to annualize the 10 weeks which is 1/5 of the year. So 5 times $25=$125 which is 50% yearly interest rate.

Your terms & rates may very

I`m not putting down any tool truck business here. They provide quality tools delivered to your door with pay as you earn. I believe as said above pay you saving account each pay day and get a discount for paying cash

What I'm assuming here is the 43% premium you pay for the Snap-on name is essentially the interest you're paying for buying the tool on time. You have to pay 43% interest over a relatively short period (a couple of months), so the equivalent annual percentage rate ends up being really big.

Note that you probably should be paying some kind of premium for the Snap-on dealer service, but even if you split the difference between $175 and $250 the effective annual interest you're paying is still in the triple digits.

How is anyone's profit concidered interest? If an item is bought for ** dollare & sold for *** dollars, that is profit not interest.

 

[joeswamp]

Some manufactures do not discount. I'm not dealing with them direct so I don't know what they are doing.

Other tool dealers sell the wrenches at $175 (or even less), you have to assume they're making a profit.

How is anyone's profit concidered interest? If an item is bought for ** dollare & sold for *** dollars, that is profit not interest.

The point of this exercise is to figure out the effective rate of interest the customer experiences when he buys a tool over time from Snap-on. Normally it's hard to do this because Snap-on charges the same price for a tool whether it's bought in cash or over time. However, the torque wrench described provides an apple-to-apples comparison because it's a standard item that Snap-on just relabels.

I can buy a PI torque wrench in cash from one of several dealers for $175, or I can buy it on time from Snap-on for a total cost of $250. From my standpoint, what annual interest rate am I effectively getting charged when I buy the tool over time?

 

[daveblank]

I can buy a PI torque wrench in cash from one of several dealers for $175, or I can buy it on time from Snap-on for a total cost of $250. From my standpoint, what annual interest rate am I effectively getting charged when I buy the tool over time?

Think of it this way. Lets assume SnapOn gets it at a discount. They then Sell it to the Distributor for $175. What price is the distributor supposed to sell it for? $250 gives him a 30% profit margin. Out of that margin he has to pay all his bills (truck payment, fuel, insurance, credit card fees, & the list goes on). You have a pre-concieved notion that there is an "effective" interest rate but there is not.

When you go to the grocery store & buy a box of cereal for $4 you don't think that's the same price that the grocer paid do you? So is his profit concidered interest to you? You'll say no because you paid in full at the time of purchase. If you used a credit/debit card it will be 2-7 days before they get the money, therefore you have just bought the groceries over time.

Interest is what you pay above & beyond the selling price as a fee for the service.

 

[Scooterfish]

I`m far from an expert on tool trucks however I have a good under standing of business and ALL business must make a profit. You would be surprised how many look at me funny when I say " I want and expect businesses I deal with to make a profit"

I`m sure there are alot of factors but would it be common to get a 10% discount if I`m paying cash? Thats why I was using the 10% figure of $250 =$25 as the cost of interest.

It`s interesting when other busineses say 90 days credit no finance charge. Then say 10% discount for cash.

 

[daveblank]

"

I`m sure there are alot of factors but would it be common to get a 10% discount if I`m paying cash?

For me, many times that's no problem. But there are some items that there's not much margin on so I really can't do it on them.

 

[SpiderGearsMan]

without truck credit
I would have no tools
I would have bought stocks that would be worthless today
hooray for truck credit
are you sure precision instruments makes snap on torqueometers ? I have one , all steel , says snap on all over it , it costs 600 bucks
the ones with the plastic housing seems like a precision instrument one

 

[joeswamp]

Think of it this way. Lets assume SnapOn gets it at a discount. They then Sell it to the Distributor for $175. What price is the distributor supposed to sell it for? $250 gives him a 30% profit margin. Out of that margin he has to pay all his bills (truck payment, fuel, insurance, credit card fees, & the list goes on). You have a pre-concieved notion that there is an "effective" interest rate but there is not.

I have no problem with the truck guy making 30% profit, but I think it's crazy wrong if Snapon charges full retail pricing to its distributors, especially for a tool that they didn't even develop! Distributors are not retail customers; they buy in bulk and should be much more creditworthy than the average retail customer. Does this mean that every Snap-on tool has had its retail markup applied twice? Snap-on should be splitting the retail markup with the distributor. In fact the distributor should probably get much more since he has to deal with smaller volumes and all the crazy retail customer aspects.

I agree that the "buy on time" business model is great, as it's about the only way a mechanic starting off can afford to get a high end tool collection. I'm spending a lot more on my house than if I bought it in cash, but otherwise I wouldn't have a house so it's great. I just wish I could buy Snap-on tools in cash for normal retail prices, and not the same price that I'd pay if I bought it over time.

 

[joeswamp]

without truck credit
I would have no tools
I would have bought stocks that would be worthless today
hooray for truck credit
are you sure precision instruments makes snap on torqueometers ? I have one , all steel , says snap on all over it , it costs 600 bucks
the ones with the plastic housing seems like a precision instrument one

Again, I agree that truck credit is great I just wish I could opt out.

And I am about 99% sure that it's the same wrench as I have both and they are identical in virtually every detail.

 

[SpiderGearsMan]

the snappy wrench I have looks like the ones snap has been selling for years
I can't see them farming it out since they charge so much for it

 

[vssjim]

Snap-on OWNS Precision Instruments all they are doing is charging the dealers more for the tool, in no way is a dealer getting them for $100.00. The average tool mark up for a truck dealer is 30 to 38% from the parent company he has no say in what a product is sold to some one else for as far a price. Precision instruments could under cut every Snap on dealer but people always know where to buy them.